Revenue NSW has issued Revenue Ruling DUT 047:Consideration and GST Withholding that clarifies that duty is still payable on the purchase price, including the GST component, even if GST withholding applies and the purchaser pays the withheld amount directly to the ATO.
The Ruling follows the changes to GST on property sales commencing on 1 July 2018, where purchasers of new residential premises or residential land are required to withhold an amount, that would otherwise be payable to the vendor on account of GST, and pay this directly to the ATO.
This is correct and ought be uncontroversial (and, indeed, other jurisdictions could well put out similar rulings).
Having said that, there could be a minority of cases, where the purchase price is not just the sum of the amounts the purchaser pays to the ATO added to the balance he pays the vendor. The purchaser has an obligation to pay a specified part of the total ‘consideration’ to the ATO (on account of the vendor’s presumed GST). A purchaser would (typically) withhold that amount from any cash amount paid as consideration for the purchase (and, indeed, he gets a statutory indemnity for this withholding). But, if there were no cash consideration to pay, the purchaser could still have to pay the amount to the ATO.
Comprehension questions (answers available)
- Is duty paid on the purchase price, including any component for GST?
- Does this change, just because the purchaser might have to pay some of the purchase price to the ATO (instead of paying it all to the vendor)?
- Do you always include the amount the purchaser pays to the ATO (under the GST withholding regime), in the purchase price, for duty purposes?